As an electrical wholesaler, Rexel Germany targets customers from industry, trade, and craft. Tailored to the specific requirements of each individual customer, Rexel offers a wide range of sustainable and innovative high-quality products. Together with competent consulting and logistics services, Rexel creates comprehensive value-add that customers can benefit from: from comfort and convenience to safety and energy efficiency in plants, infrastructure, and buildings. Nicole Steuer, General Counsel D/A/CH provides insight into why and how her team uses artificial intelligence in the legal department.
Mrs. Steuer, what is the importance of digitalization in the legal department for you?
Nicole Steuer: The topic of digitalization is a top priority for me. However, I make a clear distinction between the digitization of processes and the use of artificial intelligence. For me, these are two different topics.
We are currently looking at a high level of digitalization in the company, including in the legal department – and especially in the area of compliance. It's almost a given that the topic of contracts will come up. There we have identified great potential for efficiency gains and risk minimization, especially in the area of contract review.
What tipped the scales in favor of using artificial intelligence for contract review?
I think I'm not the only one who has to deal with this challenge as general counsel: do more with less. More and more requests are coming to the legal department from both external and internal stakeholders, while we have the same limited resources. In view of this development, I was considering "hiring an AI colleague" some time ago.
To illustrate this using the area of contract review as an example, consider that there is only a limited number of employees in my team who review contracts – fully qualified lawyers.
Previous attempts to train other staff with limited legal knowledge on the subject did not really work. So the reviewing of contracts was once again entirely carried out by fully qualified lawyers in our team. But the repetitive review of standard contracts, such as general terms and conditions (T&Cs) or non-disclosure agreements (NDA), is unfortunately not very exciting, takes up a lot of time, and does not provide any real added value. This is where artificial intelligence can provide some support.
That being said, it is very important to me to always make it clear that AI will not take away anyone's work and will not replace any lawyers.
With this clear premise in mind, we were able to start the project together as a team and find a solution for using AI in the contract review process as a welcome assistant that would take over repetitive, non-value-added tasks and relieve the team.
So the need for an AI-assisted contract review was there – how did you go about getting closer to achieving your goal?
I had wanted this for a long time, but at that time there were no solutions available on the market. This is why I tried going with a start-up very early on, but unfortunately the company didn't survive the COVID-19 period. However, I was still convinced of the idea of AI-supported contract review. I therefore asked my team to look for an alternative solution. This was also important to me so that the "AI" we found would have the acceptance of the team.
My team subsequently invested quite a bit in searching and evaluating a possible solution that was closely aligned to our wishes and what we had envisioned, pre-identifying Legartis as the most promising option. Following our internal processes we then jointly decided on Legartis. It quickly became clear to us that Legartis was exactly what we had in mind.
What were the reasons you chose Legartis?
Even during the demo we realized that this is a mature product that is ready for immediate use. In addition to the proven and pre-trained functionality of the AI, user-friendliness was one of the most important decision criteria for me. Legartis is extremely user-friendly, naturally follows lawyers’ workflows, and guides them comfortably through the contract review. To briefly mention the most important factors that convinced us:
- The AI is already pre-trained and ready for immediate use. It does not need any co-development from us.
- Different contract templates can be integrated and managed within the contract playbooks. This ensures a robust transfer of knowledge.
- Extremely user-friendly operation that optimally supports lawyers’ contract review process.
- Short onboarding and training phase for lawyers, so that they can quickly benefit from the AI.
- The contract review tool as a Word add-in is installed very quickly.
- Legartis is a company based in the D-A-CH zone and guarantees high data protection standards.
How was the AI received by your team? How successful was the initial phase?
Since I had involved the team from the beginning and we had developed the entire AI project together, the team was excited for the onboarding. The introduction and implementation of Legartis’ solution were efficient and professional. The team could use the AI right from the start. The fact that both the onboarding and current use runs so smoothly is extremely positive. My expectation was that the tool would be used, since often expensive software is first purchased and then not used because it is too complicated or inefficient. But the employees have accepted Legartis very quickly and enjoy working with it.
The team uses Legartis because they are convinced that it offers individual-level added value.
Furthermore, the quality of the AI’s contract review should reach a certain standard, such that the team is genuinely relieved and does not have to review the results of the AI again. I have also received positive feedback on this from the team, which makes me happy. Nevertheless, we still need more data on this, especially with the other contract types that we would like to have checked with AI.
Which contract types do you check with the AI?
At the moment we have started with NDAs first, as these are highly standardized contracts. Nevertheless, NDAs still have to be read through carefully, in their entirety. This is time-consuming and not very demanding work that actually under-challenges my staff. This type of contract is therefore suitable for the start, to gain initial experience with the AI.
In addition, we use AI to check our more extensive Master Agreements. These concern our core business and are as such of great importance for us. We have a high volume of contracts of this type and therefore need a certain degree of standardization. In other words, we cannot negotiate each contract individually; rather, the contracts must fit into our business construct and existing processes. It takes years of experience in the industry, the business, and recognizing business risks to identify which clauses in framework agreements are acceptable and which are not.
The AI ensures that optimal clauses, rules, and wordings are located in the contract playbook and that corporate standards are met equally by all lawyers. AI-assisted review enables us to improve risk management by immediately identifying which clauses violate, contradict, or are worded differently from the corporate standard. And when we look at the volume of framework agreements and the possibility of minimizing risk, particularly in these agreements, AI also adds a lot of value from a risk perspective.
The next step I have in mind is to have the AI also check general T&Cs. These are exhausting to read, heavily codified, and often quite extensive; T&Cs in particular take a lot of time because the devil is in the detail. Since we have a specific set of general T&Cs, we would like the AI to check the T&Cs of our business partners if necessary and show us the differences or contradictions to our regulations. That would already make our work much easier and faster.
Which gains do you expect for your team long-term?
I see clear gains in quality here. In the future, AI will not only make it possible to process and quickly check contracts, but I also expect a consistently high quality of contract review.
In addition to the digitalization of the legal department, state-of-the-art knowledge management is also of central importance to me. A lack of knowledge management entails great risks and, for me, also stands for inefficiency. All of our knowledge; our clauses, formulations, and rules, which have grown from many years of experience, are now to be put down into the contract playbooks. This knowledge not only flows into the AI, but also guarantees our company a constant transfer of know-how.
Derived from this, I expect more efficient and improved onboarding for contract review. Nowadays, team members tend to change more often than in the past. With AI, the team is relieved of the onboarding process, and new team members can learn our company standards faster than before. Meanwhile, the quality of contract review being performed remains constant.
In addition to the improved knowledge management and quality gains, I also see efficiency gains. My team is relieved of the contract review process and has greater capacity for value-added tasks.
What is your vision for the legal department?
AI is to become a team member of our legal department which no one can or wants to do without – it is to work with and relieve the team, and ensure consistently high quality. It would be welcome if it could take on other tasks at a later date.
I would like our well-trained lawyers to be relieved of time-consuming, repetitive, and boring tasks by AI in the future, so that they are given the freedom to use their creativity and have their full potential unfold. They should advise our business and actively shape the company – whether they accompany sales or purchasing in the development of new business models or develop their own ideas; or they provide individual advice on new topics, creatively point out legal implementation possibilities, and develop completely new approaches to solutions.
My vision for the legal department of the future: it will consist even more so than today of highly qualified people from a wide range of disciplines and very different backgrounds and vitae; and here, fully qualified lawyers and non-lawyers will work together in an agile manner, hand in hand, to find optimal solutions. A diverse team that also includes AI. The multi-faceted skills of this team enrich the legal department, which is deeply integrated into the business and helps drive strategic business developments.
Nicole Steuer is a lawyer and member of the Munich Bar Association. She is General Counsel at the French Rexel Group for Germany, Austria, Switzerland, and Slovenia. As a member of the Executive Committee at Rexel Germany, in addition to legal she is responsible for the areas of compliance, communication, and ESG/sustainability. Nicole Steuer is also a board member of the Federal Association of Electrical Wholesalers (VEG), which represents an annual turnover of approximately 10 billion euros among its 64 member companies.